What Drives Our Group Health Insurance Premiums?

One of the most common questions we get from employers is:  “Why do our premiums keep going up?”

It’s a fair question—and one that deserves a clear answer.

While health insurance costs are influenced by many factors, understanding what drives your group health premiums is the first step to taking control of them.

Ross Durham, Employee Benefits

Claims Experience

For mid-sized and larger groups, your employees’ actual claims can directly affect your renewal rates.  If your group had high-cost claims in the past year—think surgeries, chronic conditions, or specialty medications—your rates may rise to reflect that risk.

💡 Pro tip: With level-funded or self-funded plans, you can access detailed claims reporting that helps you spot trends early.

Demographics

The age, gender, and health conditions of your employee population matter. Older groups or those with more dependents tend to have higher usage—and therefore higher premiums.

Plan Design

Richer benefits (lower deductibles, copays, or out-of-pocket maximums) come at a higher cost.  Even small tweaks to plan design—like raising an ER copay or switching to generic prescription incentives—can impact pricing significantly.

Network & Carrier Selection

Not all networks are priced equally. National PPO networks typically cost more than regional HMOs or narrower networks.  Additionally, each insurance carrier has its own underwriting formula and risk pool, so it pays to shop around.

Participation & Contribution Levels

If you don’t meet certain participation thresholds or if the employer contribution is too low, carriers may increase your premiums—or decline to offer a quote at all.

Medical Inflation & Pharmacy Costs

Even if your group’s claims are low, national healthcare inflation still plays a role.  Rising hospital costs, provider charges, and especially prescription drug prices (specialty meds in particular) are pushing premiums up across the board.

So… What Can I Do About It?

1. Review plan options annually—don’t auto-renew.
2. Explore level-funded or partially self-funded plans to gain visibility and control.
3. Promote wellness programs that help manage chronic conditions.
4. Partner with a broker (like me!) who advocates for your business and negotiates on your behalf.

Coming Next Week:

We’ll explore Voluntary Benefits—how you can offer more value to employees without increasing your bottom line.  As always, if you’d like to discuss your current plan or review cost-saving opportunities, let’s schedule a time to chat.

For more information contact the Beck / Frost Insurance Agency.  Call us at 419-446-2777, send an email to help@beckinsurance.com, or click here to submit your request today!  You can also stop by and see us at one of our four convenient locations in Archbold, Napoleon, Holgate, or Whitehouse.